Extortionate Remortgage Product fees

joAnn

I am considering dipping my toe into BTL as I have the option of purchasing a flat in my building for a good price and the current owner wishes to stay as a tenant for the time being.

My current flat has recently been occupied by a friend who was house sitting and wishes to remain on an AST.

I would need to remortgage my current flat, to pay off the remaining 5 years and and a 2nd charge, but I have good equity. The remortgage would enable me to buy the next flat and put down nearly a third of the purchase price as a deposit. So it is two separate mortgages.

My problem are the mortgage fees the lender is quoting. Since I am not a professional landlord, I would only be considered for a specialist product with each fee being approx £15k!! I nearly fell through the floor. It seems other options cant be considered for one reason or another such as EPC or not owner occupied etc and this lender being able to meet my lender requirements.

I am happy to wait and shop around, but am I going to face the same fees with every lender? The product is a 2 year deal for each mortgage and can look around once deal is finished. Happy to take a calculated risk, but not be stupid.

Any helpful thoughts?

Yorkie1

I can't comment on your specific query re. product fees. But these points also occur to me:

I don't know if the rules for Sale and Rent Back are different for private individuals who rent the property back to the former owner; hopefully others can comment one way or the other whether that would be an obstacle to be overcome in your prospective purchase of the tenanted flat.

Have you done a lot of investigation into the requirements for being a landlord? How the Renters' Rights Act 2026 will impact? Taxation aspects? It's getting more complex, and many experienced landlords are getting out of the market rather than transition to the new position. That might suggest that it's not a great time for a new landlord to be dipping a toe into the market.

ACG

Have you spoken to a broker?

There are a few things here that sound not quite right and im wondering whether the water is a bit muddied causing some confusion.

kingstreet

It's more likely this;-

"I have the option of purchasing a flat in my building for a good price and the current owner wishes to stay as a tenant for the time being"

is the issue as sale and lease back is an FCA regulated activity and is therefore unlikely to be an option for you.

https://www.citizensadvice.org.uk/debt-and-money/mortgage-problems/sale-and-rent-back-schemes/

"Sale and rent back schemes are regulated by the Financial Conduct Authority (FCA). This means the FCA checks whether firms follow all the rules and makes sure they meet certain standards. The FCA has previously found many serious problems with a number of sale and rent back firms."

Yorkie1

@kingstreet That's what I was wondering too in my post. But the various pieces of guidance refer to the situation where a commercial firm buys the property and rented it back to the former owner. However, this is a private individual purchaser - and I didn't know whether the rules applied in all sale and rent / lease back situations, or just those for regulated firms.

joAnn

Hello,

Happy to share more details if it helps to know the bigger picture.

The proposed mortgages are through a broker, with Vida and Aldermore. Broker is helpful I am looking for additional perspective.

The arrangement around the seller staying on as tenant is pretty irrelevant, maybe I framed it in the wrong way, but it is meant to be no longer than a month or so as he is not yet ready to move. The long term plan was to hand it over to an agent to manage for long or short term lets. I have good confidence around this plan for letting as it is a semi transient area of London and next to a train station, vibrant shopping area etc.

Have some experience of short term lets in the past, but I appreciate new laws are being introduced, which I think are pretty balanced.

It will be purchased through a Co Ltd.

My issue is the big arrangement/product fees being charged be the lenders. I think what I am asking really is what steps might I need to take to be in a better position to be considered by other lenders with lower fees and happy to wait a little longer to get everything aligned to do this properly, or indeed if it is a crazy idea I am also willing to walk away.

Thank you

Emmia

https://forums.moneysavingexpert.com/discussion/comment/81874567#Comment_81874567

If the vendor isn't ready to move, I'd delay your purchase until they are, even though you're planning to rent the property out.

When you become a landlord you need to be compliant with those requirements, so the way deposits are held, inspection /safety certificates etc..if you're buying from an owner occupier then that stuff won't be in place - and you won't have any opportunity to put it place before tenants move in.

kingstreet

https://forums.moneysavingexpert.com/discussion/comment/81874521#Comment_81874521

I remembered this from a good few years ago;-

https://forums.moneysavingexpert.com/discussion/5123430/renting-our-buy-to-let-back-to-previous-owner/p1

ACG

[QUOTE]

The arrangement around the seller staying on as tenant is pretty irrelevant

[/Quote]

Its not.

Could you not pay a higher rate with lower fees? Have you discussed this with the broker?

I wonder if it might be worth getting a second opinion from another broker.

The problem is that your situation is so quirky its difficult to offer meaningful help without answering a million questions. Im not looking for answers to these questions as chances are there would be offshoot questions.

But you cant remortgage your current home to a BTL because its not let out, its got a house sitter. So you are sort of in some weird middle ground where you do not fit with BTLs and might struggle with residential.

The new BTL has its own problems as already raised.

This is all without a factfind and going through other documents that may raise other issues.

Ultimately there are cheaper products but they may not be suitable. If you are not happy with what the broker is coming back with, speak to them about the products and if they have no solution, get a second opinion.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81874772#Comment_81874772

There is also the relevant matter that the purchase will be via a (new?) limited company ( severely restricting the pool of lenders in any ) and presumably with no trading history for the company.

Therefore not exactly a straight forward BTL matter, even without the other relevant considerations.

ACG

https://forums.moneysavingexpert.com/discussion/comment/81875147#Comment_81875147

A trading limited company would be harder I think unless it was an SPV.